Also See

A growing number of Americans are spending more on home renovations, and new data suggest they're not just throwing on a new coat of paint or replacing that leaky fridge. Homeowners spent an estimated $115.9 billion in the year ended June, according to the Joint Center for Housing Studies at Harvard University. That's a 4.6% jump from the year ended March and the largest increase in more than five years. What's more, the number of residential remodeling permits, which homeowners typically apply for to make major changes to their homes, soared 24% in July compared to July 2010 -- the highest level since 2004, according to data released this week by building permit tracker BuildFax. "During the first half of this year, we started to finally see some growth," says Abbe Will, research analyst at Harvard's Joint Center for Housing Studies.

In many cases, the decision to strap on a tool belt or consult a contractor isn't being driven by a desire to stay put in one's home, but by an inability to leave it. With home values in the United States still in the dumps and expected to drop another 2.5% this year, many homeowners are finding it difficult to unload their properties. Others are renovating to accommodate for more people living under their roof. There are approximately 21.8 million "doubled up" households in the U.S., up 11% from 2007, according to the Census Bureau.

But unlike the last boom in renovating leading up to the 2008 downturn, which was all about flashy upgrades, today's fixes and add-ons are focused more on comfort and practicality, say experts. Many remodels are looking to expand the space in their home by adding a deck or a garage, says Joe Emison, vice president of research and development at BuildFax. Then there are the necessary repairs: As homeowners stay in their homes longer -- on average, eight years for homes sold in 2010, up from six years in 2008 -- they're encountering things that desperately need fixing, such as a leaking roof.

Of course, homeowners should be cautious about spending money on renovations right now, say experts. With the economy still in shambles and unemployment around 9%, homeowners should make sure they have plenty in savings, including an emergency in the case of a job loss, before starting a project. Here are three more things to consider:

Don't expect to recoup your expenses. If the goal is to live longer in your current house, proceed with your renovation plans, says Emison. If it's to boost the value of the home -- and to make more when you sell it in the future -- you may be setting yourself up for a major letdown. It used to be that renovating a home would push up its selling price, helping them recover their remodeling costs. But that's less likely now. Homeowners are recouping 60% of their renovation costs, down 3.8 percentage points from last year, according to Remodeling Magazine, a trade publication. That has fallen steadily since 2005, when it peaked at 85%.

Stick to cash: To pay renovations, most homeowners use cash, says Fred Spaulding, owner of Houston, Texas.-based Quality Home Improvements and treasurer of the National Association of the Remodeling Industry. And that might be the safest bet right now. It's still not easy or recommended for homeowners to withdraw equity from their home to pay for remodeling projects -- a common tactic pre-2008 downturn. While more banks have returned to offering home equity loans and home equity lines of credit, even homeowners who can qualify should consider the risks: withdrawing more equity now leaves them at greater exposure of owing more on their home than it's worth if home values drop.

Consider lower-cost alternatives: While more renovations are under way, most homeowners are paying less than they were during the housing boom. The average project now costs $8,000, down from $17,000, according to BuildFax. That's in part because homeowners are looking for lower cost ways to improve their rooms, says Spaulding. On kitchen renovations, for example, that includes leaving cabinet boxes in place but replacing cabinet doors and drawers. On average, a midrange (meaning not upscale) minor kitchen remodeling project costs $21,695, according to Remodeling Magazine. While expensive, it's cheaper than the average major kitchen renovation, which runs $58,367 on average.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.